Bipartisan backing vital for RBA chiefs

Two former Reserve Bank of Australia board members have called for a bipartisan approach to any potential replacement for governor Glenn Stevens.

The Weekend Australian Financial Review reported last week that Mr
Stevens
was mulling whether to leave at the end of his seven-year term in September, or extend for a few more years to ensure a clean transition to his deputy,
Philip Lowe
.

Former board members Donald McGauchie and Warwick McKibbin said any process to replace Mr Stevens should be isolated from next year’s election cycle. “I would be concerned if it was an outside appointment that wasn’t totally bipartisan," Mr McGauchie said.

“An appointment that wasn’t widely supported would be unhelpful because the institution is very important to the country and its reputation and people’s respect for it."

Sources on both sides of politics have signalled they would support Mr Stevens if he chose to stay. But a potential departure next year could open the door to an outside appointment, including former Treasury secretary
Ken Henry

Federal Treasurer
Wayne Swan
may face similar questions about Australian Prudential Regulation Authority chairman
John Laker
, whose term ends in mid-year.

Both sides of politics acknowledge Mr Stevens has led the bank through one of the most difficult five-year periods since the Great Depression, indicating there would be support for a longer term.

Mr McKibbin, who left the board this year after a decade, said it was vital the right person was found and called for a bipartisan committee to make recommendations to Mr Swan.

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“For the governor’s job, you have to have very good understanding about the economy and incredible composure. There are so many things that could rattle you . . . and you’re also batting off political innuendo and the corporates and unions," Mr McKibbin said.

A precedent for a partial second term was set by his predecessor, Ian Macfarlane, who served for 10 years until September 2006.

But Mr Macfarlane’s case was unusual in the history of the bank.

The four men who preceded him – Bernie Fraser, Robert Johnston, Harold Knight and John Phillips – all had seven years with no extensions, while the bank’s founding governor, Nugget Coombs, held the office for 8½ years until mid-1968.